JPMorgan Reaches Record $13B Deal with Gov't

JPMorgan Reaches Record $13B Deal with Gov't

Daily Real Estate News |
Wednesday, November 20, 2013

JPMorgan Chase finalized a record-breaking settlement Tuesday with the U.S. Department of Justice, agreeing to pay $13 billion to settle claims over toxic mortgage investments during the the 2008 financial crisis.

The nation’s largest bank admitted during the investigation that it knew that “residential mortgage-backed securities that it marketed did not comply with underwriting guidelines and weren’t suitable to sell,” USA Today reports.

The $13 billion settlement will mark the largest government settlement ever paid by one U.S. company.

Under the agreement, JPMorgan will pay $9 billion to settle federal and state civil claims related to mortgage securities. The bank will pay $4 billion in relief to consumers who were harmed by the bank’s actions. That relief will mostly be in the form of principal forgiveness or loan modifications.

"Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown," says U.S. Attorney General Eric Holder. "JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm's behavior."

JPMorgan Chief Financial Officer Marianne Lake said the bank does not admit to violating the law. Also, most of the improper mortgage conduct occurred at institutions that JPMorgan Chase had later acquired, such as Bear Stearns and Washington Mutual, she said.

"We are pleased to have concluded this extensive agreement ... and to have resolved the civil claims of the Department of Justice and others," says Jamie Dimon, the bank’s CEO.